THE INCOME DERIVED BY THE APPLICANT OUT OF THE PURCHASE AND EXPORT CTIVITIES UNDERTAKEN BY HIM ATTRACTS CHARGE TO TAX UNDER SUB-SECTION (2) OF SEC.5 OF THE IT ACT, 1961 AS THE INCOME IS RECEIVED IN INDIA AND HAS ACCRUED IN INDIA.

Where the facts showed that the income arising from the sale proceeds of exported goods had actually been received in India because the applicant’s banks at Chennai had been crediting the amounts received from the importer/buyer to the account of the applicant, HELD

(i) Where the income is actually received or has accrued in India, the resort to deeming provision is not warranted and s. 5(2) is sufficient to create a charge in respect of non-resident’s income. Clause (b) to Explanation 1 makes no difference to this position.

(ii) As the right to receive the payment has arisen in India on account of export sales of gold jewellery to the importers abroad, the income actually accrues or arises in India and there is no scope for the argument that the accrual is nullified by clause (b) of Explanation 1 to section 9(1). Clause (b) does not have the effect of preventing the accrual of income altogether.